Scoppe: How SC Gov Nikki Haley lost the House, the ridiculous tax cut and any say on road improvement

GOV. NIKKI HALEY overplayed her hand so badly by trying to hold a road-improvement plan hostage to her budget-busting tax-cut proposal that she took herself out of the game. That means what happens with the top priority for the state’s business and political communities will be decided by the House and Senate, without the governor’s input.

That’s the most obvious take-away after the House voted by a margin of more than 4-to-1 for a road-funding plan that raises taxes by nearly $400 million. Less obvious but potentially important: If the House and Senate can reach agreement on a plan that retains anywhere near that much support — not a sure thing, but there’s no legitimate reason it can’t happen, if Senate leaders are as committed to tackling our long-neglected roads problem as they say they are — this could signal a huge shift in how our Legislature does its job.

One House leader described the 87-20 vote as “a kind of a line in the sand” akin to “pulling the curtain from the guy in the Wizard of Oz.” Senate President Pro Tem Hugh Leatherman even implied that it could breathe new life into efforts to expand Medicaid to cover more of the working poor.

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That’s probably a stretch — suggesting as it does that there is as much support in the House for Medicaid expansion as for fixing our roads — but still, for any student of S.C. politics, last week’s marathon debate was an astounding thing to watch.

Big surprises

There was GOP Rep. Gary Simrill beating back proposals to slash taxes more than his bill proposed to raise them, by explaining that, yes, it actually does cost money to repair roads.

There was GOP Rep. Kirkman Finlay lecturing the House on how irresponsible it would be to slash taxes when the state faced what he described, conservatively, as a $10 billion unfunded liability — and giving as good as he got when Rep. Tommy Stringer tried to paint him as a tax-and-spend liberal who thinks government is the solution to all problems.

There was Ways and Means Chairman Brian White patiently explaining that having more revenue isn’t the same as having extra revenue, as the governor likes to pretend, because it costs more every year to maintain services in the face of inflation and population growth. This year, for instance, the Legislature expects to have $311 million more than last year, but $269 million of that is already spoken for just to maintain the status quo: $95 million to replace the one-time money that was used last year to fund Medicaid, another $13 million for a similar problem with local-government funding, $50 million for state employee health-insurance premiums, $10 million to maintain an autism program whose rules were changed by the federal government, $8 million to replenish a constitutionally required reserve fund and $94 million to increase spending by $100 per K-12 student, as part of an effort to return it to what state law requires.

Suspended disbelief

There shouldn’t have been anything astounding about hearing House leaders making those arguments. After all, every single statement was indisputably true, and they all point to this larger indisputable truth: If you want to increase spending on roads by $400 million a year, you’re going to have to either slash $400 million from overall state spending — which nobody, not even the governor, has proposed to do — or else you have to raise taxes by $400 million a year. (Whether you want to increase spending on roads is a different question — and one that pretty much everyone in the political class, including the governor, seems to have answered affirmatively.)

But for decades now, S.C. House members — and in recent years, a growing number of senators — have been living in a permanent state of suspended disbelief, peddling the fantasy that if you keep slashing taxes and slashing taxes, the result will be that you have much more money to pay for roads and schools and police and courts and all the other things that a society needs in order to be a society. Maybe those supply-side theories work for a nation — I’m an agnostic on that — but they do not work for a state, and certainly not a small state like ours.

Reality check

On the House floor on Wednesday, it was as though our representatives suddenly snapped out of the fog, and realized that the laws of math really are laws. And that, unlike the ones they write, these laws cannot be suspended.

And so there was the overwhelmingly conservative, anti-tax House rejecting proposal after proposal to cut taxes by more than the $50 million-a-year cut that Mr. White had added to the roads bill to give those overwhelmingly conservative, anti-tax House members political cover.

And finally, there was the overwhelmingly conservative, anti-tax House voting by a mind-numbing 87-20 to pass a $428 million-a-year tax increase that would be paid for by just about everybody in the state. The magic number in the House — the number necessary to override a gubernatorial veto — is 82. House leaders think they would have had as many as 95 votes if the tally had been taken earlier in the very long day, before attendance started dwindling, so it’s theoretically possible that an override vote could be even more convincing.

With the exception of the cigarette tax — which is paid only by the (thankfully) dwindling number of people who smoke, and even supported by some of those folks — this would be the first time the Legislature has passed a net tax increase since the last time lawmakers raised the gasoline tax, in 1987.

That time, the Republican governor, Carroll Campbell, negotiated down the increase from 5 cents to 3-cents-a-gallon and then supported it. This time, the Republican governor went on the warpath to defeat it, not only promising to veto any net tax increase, but promising to veto any roads bill that doesn’t slash taxes by five times as much as it raises them.

A bridge too far

In the face of that absurd demand, it felt at times like it would be impossible for the House even to pass a bill, much less to pass it by a veto-proof margin. But it just might be that it was the governor’s absurdity that made the House plan palatable. It was so over the top that it was almost easy for House Speaker Jay Lucas, along with Reps. Simrill and White, to get Republicans to look past the governor’s bluster and instead consider the facts.

Which are these: South Carolina has neglected its highways and bridges for a couple of decades, to the point where the neglect threatens our economic-development efforts, and smacks every one of us in the pocketbook every day, as we subject our cars to extra wear and tear.

The backlog is so large and expensive (repaving one lane for one mile costs $125,000) that there is no way to make a significant dent in it simply by diverting money from the rest of state government, where services are only beginning to recover from recession cuts.

Money doesn’t grow on trees, so if you want to solve this problem, you have to raise taxes. And you won’t solve the problem — indeed, you’ll create a host of new problems — if you cut taxes by five times as much as you raise them.

In the end, the governor’s proposal was so ridiculous that not a single House member was willing to offer it up as an amendment to the bill.

Ms. Scoppe can be reached at cscoppe@thestate.com or at (803) 771-8571.

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